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OM Holdings Ltd

OM Holdings reflects on “outstanding quarter”

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OM HOLDINGS LIMITED (ASX Code: OMH) has posted an outstanding quarterly result featuring record production and sharply lower costs as it reaps the benefits of the new operating strategy implemented earlier this year.

The global mining and metals marketing group revealed today that production at its Bootu Creek project in the Northern Territory hit a record 205,372 tonnes at 39.4% Mn in the September quarter.

July production set a record monthly total of 77,398 tonnes at 39.2% Mn.

Bootu Creek, located 110 km north of Tennant Creek in the Northern Territory, has the capacity to produce over 800,000 tonnes of manganese product annually.

The project has further exploration potential given that its tenement holdings extend over 3,326 km2.

The news comes less than a month after unveiling its plan to become one of the world’s largest manganese companies through the A$294 million proposed acquisition of a major interest in a South African project.

The latest quarterly production result was up 25% compared with the previous three months, highlighting the gains generated by the implementation of OMH’s revised production and marketing strategy which has delivered improvements in the mine’s capacity, yield, recovery and cost performance.

And the news is set to get even better, with the Company foreshadowing further rises in production to 70,000 tonnes a month at 38% Mn in the current quarter.

It said OMM shipping and sales were also expected to reach 240,000 tonnes this quarter, up from 185,385 tonnes in the September quarter.

The operational achievements were contained in OMH’s September Quarterly Report, which was released to the ASX.

In the report, OMM’s C1 costs fell to $A3.80/dmtu in the September quarter, a fall of 20% from the June quarter and a 44% fall from the March quarter.

In July, the C1 monthly cost fell to A$3.20/dmtu, the lowest in the recent history of Bootu Creek.

OMH chief executive Peter Toth said the outstanding results reflected the successful implementation of OMH’s previously announced production and marketing strategy.

“The production and cost performance of OMM during the quarter continues to confirm that we are on the right track with our revised production and marketing strategy,” Mr Toth said.

“Bootu Creek continues to achieve improvements in the mine’s capacity, yield, recovery and cost performance.”

OMH said commissioning of the Bootu Creek Secondary Processing Plant was on target to be completed this quarter.

This will enable total manganese ore production to reach close to 1 million tonnes heading into 2010.OMH also reported today its 100% owned Qinzhou smelter in China recorded sales of 10,527 tonnes of High Carbon.

The construction of a new sinter ore plant is on budget and scheduled to be commissioned at the end of this calendar year.

The smelter benefited during the quarter from rising prices and growing demand, enabling it to record a solid operating profit and cash flow.

In addition to the 185,385 tonnes shipped and sold from the Bootu Creek operation, the Singapore based marketing operation also sold 55,501 tonnes of third party product.

The marketing division reported higher ore prices of up to A$6.50/dmtu CFR China in the quarter. It noted that prices for the rest of 2009 were expected to stay around the A$6/dmtu CFR China level due to continued strong ore and alloy demand from China.

OMH noted that an important change in pricing dynamics had occurred in the market during the quarter, with major high grade producers switching from a quarterly to a monthly pricing approach.

OMH said this would create a more accurate pricing mechanism reflecting the prevailing supply and demand situation.

“The strong operating profit contribution from our Qinzhou smelter during the quarter demonstrated the benefits of the relentless focus on costs, efficiencies and customer relationships,” Mr Toth said.

“Both of our organic growth projects, the Bootu Creek Secondary Processing Plant and the Qinzhou sinter ore plant, are on track for Q4 2009 commissioning.

“I have no doubt 2010 will be an exciting year in terms of our fully optimised production capability from Bootu Creek together with the introduction of high-grade sinter ore into our product suite.”

Quick facts: OM Holdings Ltd

Price: $0.65

Market: ASX
Market Cap: $480.11 m
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